Warren Buffet: Scrutinise the CEO
May 23rd 2007 07:29
May is ending and 30 June 2007 will soon arrive and followed by the Annual Reports two months later. What are you going to do? Warren has some tips for you, from 22 years ago.
"When returns on capital are ordinary, an earn-more-by-putting-up-more record is no great managerial achievement. You can get the same result personally while operating from your rocking chair. just quadruple the capital you commit to a savings account and you will quadruple your earnings. You would hardly expect hosannas for that particular accomplishment. Yet, retirement announcements regularly sing the praises of CEOs who have, say, quadrupled earnings of their widget company during their reign - with no one examining whether this gain was attributable simply to many years of retained earnings and the workings of compound interest."
1985 Chairman's Letter to Shareholders
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